Check out a few observations I have been sharing with passive investors.
(Of course, keep in mind that operational excellence is always important, regardless of market conditions.)
- Less Buyers, More Renters: Affordable workforce housing has been an issue for a while with prices outpacing income. Low interest rates have helped mitigate the problem to some degree, but with prices and rates rising more people will be priced out of the market.
- Increasing Housing Demand: Gen-Z is the largest demographic represents 26% of total US population. They’re just starting to hit the housing market. Combined with Millennials they make up over half of the US population.
- Delaying Homeownership: Every generation since Boomers have waited longer to purchase their first home. It is expected that trend will continue with Gen-Z. Additionally, whether due to financial reasons or personal preference more people are becoming lifetime renters. Remote employment options & the short-term rental market has impacted this trend.
- Migration: Within the US some states have enjoyed a surplus of new residents while others have seen their population decrease. This trend dramatically increased in 2020 when the COVID pandemic started.
- Immigration: Immigrants make up nearly 15% of the US population. Immigration slowed during COVID but as long as American businesses have a surplus of job openings available the government will be incentivized to import labor through immigration.
- Inflation: Real estate has long been seen as a strong hedge against inflation. With inflation still high and trending higher investors will seek to shelter their wealth in real estate.